Scramble starts for Idaho's cigarette tax revenue

BOISE, Idaho (AP) — With Idaho's $130 million Capitol renovation and expansion nearly paid off, there's a scramble for nearly $11 million in annual tobacco-tax revenue that come 2015 will no longer be needed to cover bonds that paid for the improvements.

For instance, Gov. C.L. "Butch" Otter wants the cash, from the 57 cent tax paid when somebody buys a pack of smokes, to help pay the state's share of Medicaid.

But House Majority Leader Mike Moyle, R-Star, launched his own plan Friday that could get in the governor's way.

Moyle says the coveted cigarette-tax revenue, which paid for lawmakers' new basement offices and tens of thousands of square feet in new meeting rooms, should be redirected toward Idaho's aging highways as well as water projects designed to help the state's agriculture industry from irrigation shutoffs like one ordered last month near Twin Falls that could eventually dry up 157,000 acres.

"As we were realizing that this building is getting paid off, we were wondering, 'Where does the state need more funds?' " Moyle told members of the House Revenue and Taxation Committee on Friday.

The tax panel agreed to hold a formal public hearing on Moyle's bill, which shifts the money to help pay off bonds from the roughly $840 million "Connecting Idaho" roads project as well as recharging aquifers. Anything left would go into the state's transportation account, to be used where needed to repair bridges and roads, Moyle said.

Moyle said Idaho's roads, facing an estimated $262 million annual shortfall in maintenance funds, and Idaho's drought-plagued agriculture-based economy should take precedent when it comes to moving the cigarette money around.

Otter told legislators in early January, however, that he had other plans for the cash.

He contends dedicating cigarette revenue to Medicaid health insurance for poor people makes sense because many may suffer from tobacco-related illnesses. Dick Armstrong, director of the Idaho Department of Health and Welfare, said Friday that argument remains as true today as it did two months ago, when Otter floated it.

"A lot of the Medicare costs are (caused) by illnesses associated with the use of tobacco," Armstrong told The Associated Press. "The core issue for us was (that) it's health-care related."

But will the Republican governor insist on the plan if legislators go some other way? His spokesman, Jon Hanian, told the AP that all ideas, Otter's and Moyle's included, will be scrutinized in coming weeks.

"Obviously, there is this process that unfolds every year in the Legislature," Hanian said, on decision-making over where taxpayer funds wind up being spent. "They're going over our ideas, and we're going over theirs. What the governor has always indicated is, he's open to being persuaded."

Of course, more ideas could still surface, with other pressing needs in the state.

After all, there are 105 lawmakers, as well as plenty of lobbyists whose clients could put the money to work.

Stacey Satterlee of the American Cancer Society Cancer Action Network said dedicated funding for tobacco-cessation programs or a more robust campaign to keep young people from lighting up could pay dividends in terms of future health-related costs.

"We have youths starting smoking. We have people who are smoking and want to stop. We have programs we could more fully fund on a state level, in terms of education and prevention," Satterlee said. "We'd love to see some of the money go toward that."

Other ideas: Idaho has a roughly $60 million annual bill, split between counties and the state, for its indigent health care fund, a portion of which could come out of the cigarette money.

Education advocates may want to see a little something go to schools or Idaho's cash-strapped colleges and universities.

"There has never been a shortage of ideas for extra money," said House Minority Leader John Rusche, D-Lewiston. "However, many of us don't think it's extra money, because we have definite needs in education, higher education and mental health services."